Elon Musk's journey provides valuable insights for aspiring entrepreneurs and experienced leaders. While his successes at Tesla and SpaceX are widely recognized, his struggles at X, formerly Twitter, hold equally intriguing lessons. What can we learn about unicorn-leadership from Musk’s stewardship of X?
Here are 5 lessons for growth-seeking entrepreneurs from Musk’s leadership.
#1. Nurture Your Customer Base. Avoid Confrontation.
To succeed in the market, customers need to love you, or like you, or not hate you.
· Customers usually have other options. If customers have different political inclinations than you do, it may be financially smart to hide your political leanings.
· Avoid declaring war on your customers. Musk is also supposed to have noted (in the above article) that he “will go to war” with his advertisers, and that he wins wars. The first rule of business is to love your customers and make them love you. Getting into a war with customers never helps Foster goodwill.
#2. Distinguish Between the Needs of Startups and Turnarounds.
Musk was the early investor in Tesla and led its growth to make it into one of the world’s leading companies. He started and built SpaceX into a leader in space transportation. Now he is struggling to remake X in his own image by imprinting his vision – but the journey is not going well. From all indications, X’s revenues, advertising and employment have fallen. Startups can be molded in your desired image. Existing businesses have their image and changing it may result in value destruction.
· Existing businesses have employees with institutional memory. Getting rid of key employees can result in this loss of institutional memory and alienate the parties involved.
· Even failing companies often have competent managers but may require new leadership. Twitter founder Jack Dorsey’s assessment of former Twitter CEO Parag Agrawal was that he was a competent manager. Did X need new leadership? Is Musk capable of providing it?
#3. Adjust Leadership to the Stage of the Business.
As a venture transitions from startup to maturity, the entrepreneur needs to grow from the brashness of the all-conquering entrepreneur to the statesmanship of a matured CEO. Musk has been successful at developing and implementing leading-edge technology as demonstrated in his leadership of Tesla, including Full-Self Driving. However, he seems to be struggling at X when it comes to people-centric leadership, which can be key to lead a successful corporation.
#4. Adapt to the Industry.
One size does not fit all. Different industries need different skills. Technology industries have different needs than consumer-based industries. Technology businesses may succeed with cutting-edge technology and successful entry into emerging industries. Consumer-based businesses, like X, may need to be concerned about market sentiments. Musk has succeeded in tech. Does he have the skills when it comes to consumers.
#5. Focus investor attention strategically.
Musk seems to be trying to focus investor attention on the “shiny new toy” and away from problems. His recent visit to China seems to be trying to focus investor attention on the self-driving car. But the visit seems to be promoting an existing technology that is not the leading edge in a market where Tesla is losing share. Will the PR work?
Leadership is complex, especially when the businesses are varied. Entrepreneurs may want to understand the stage and kind of business they excel at or understand the challenges of different stages and kinds of businesses.
MY TAKE: Musk is a brilliant technology-based entrepreneur. But is he a great people-based leader? Has he reached his level of competence? Is he proving the Peter Principle, where employees, or entrepreneurs in this case, are promoted to their level of incompetence?